Who Purchases Private Health Insurance under Taiwan’s National Health Insurance Program: An Empirical Study from Latent Class Analysis

The purpose of this study is to examine who purchases private insurance in Taiwan based on latent class analysis (LCA) framework. The 2005 Nation Health Interview Survey (NHIS) linked to the 2006 and 2007 National Health Insurance Research Claim Database (NHIRD) have been used to identify individual’s risk preference classification by LCA. We further utilize a bivariate probit regression to investigate the relationship between each latent risk preference classification and purchase of private health insurance, and the sub-sequent inpatient service utilization. Empirical results indi-cate that compared with the high cautiousness class, individuals in the low cautiousness with smoking behavior class tend to less likely to purchase private health insurance; how-ever, individuals in the low cautiousness with smoking behavior class and private health insurance tend to more likely to utilize inpatient services. Our empirical results provide information about how insurance companies can perform a target market strategy on their potential customers. © 2021, Tamkang University. All rights reserved.